[Federal Register Volume 59, Number 2 (Tuesday, January 4, 1994)]
[Rules and Regulations]
[Pages 243-256]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-32]


[[Page Unknown]]

[Federal Register: January 4, 1994]


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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Parts 161 and 250

[Docket Nos. RM87-5-012 and CP87-238-003; Order No. 497-E]

 

Inquiry Into Alleged Anticompetitive Practices Related to 
Marketing Affiliates of Interstate Pipelines and Ozark Gas Transmission 
System; Order on Rehearing and Extending Sunset Date

Issued December 23, 1993.
AGENCY: Federal Energy Regulatory Commission.

ACTION: Final rule; order on rehearing and extending sunset date.

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SUMMARY: This order rules on requests for rehearing of the Commission's 
order on remand issued following the decision of the U.S. Court of 
Appeals for the D.C. Circuit which upheld in substantial part the 
Commission's final rule governing the relationship between interstate 
natural gas pipelines and their marketing or brokering affiliates. The 
order on remand, among other things, narrowed the scope of the 
contemporaneous disclosure requirement by pipelines with respect to 
sales and marketing information and extended the sunset date of the 
final rule's reporting requirements. The order on rehearing, among 
other things, deletes the remaining categories of gas sales and 
marketing information from the contemporaneous disclosure requirement 
and further extends the sunset date.

EFFECTIVE DATE: This final rule is effective January 1, 1994.

FOR FURTHER INFORMATION CONTACT: David Faerberg, Office of the General 
Counsel, Federal Energy Regulatory Commission, 825 North Capitol 
Street, NE., Washington, DC 20426, (202) 208-1275.

SUPPLEMENTARY INFORMATION: In addition to publishing the full text of 
this document in the Federal Register, the Commission also provides all 
interested persons an opportunity to inspect or copy the contents of 
this document during normal business hours in room 3104, 941 North 
Capitol Street, NE., Washington, DC 20426.
    The Commission Issuance Posting System (CIPS), an electronic 
bulletin board service, provides access to the texts of formal 
documents issued by the Commission. CIPS is available at no charge to 
the user and may be accessed using a personal computer with a modem by 
dialing (202) 208-1397. To access CIPS, set your communications 
software to use 300, 1200, or 2400 bps, full duplex, no parity, 8 data 
bits and 1 stop bit. CIPS can also be accessed at 9600 bps by dialing 
(202) 208-1781. The full text of this rule will be available on CIPS 
for 30 days from the date of issuance. The complete text on diskette in 
WordPerfect format may also be purchased from the Commission's copy 
contractor, La Dorn Systems Corporation, also located in room 3104, 941 
North Capitol Street, NE., Washington, DC 20426.

I. Introduction

    On December 4, 1992, the Commission issued Order No. 497-D1 in 
response to the opinion issued by the United States Court of Appeals 
for the District of Columbia Circuit in Tenneco Gas v. Federal Energy 
Regulatory Commission (Tenneco)2 which upheld in substantial part 
Order Nos. 497 and 497-A,3 the Commission's final rule governing 
the relationship between interstate natural gas pipelines and their 
marketing or brokering affiliates. However, the court found that the 
Commission did not adequately justify its extension of the 
contemporaneous disclosure requirement of Sec. 161.3(f)4 of the 
Commission's regulations to gas sales and marketing information. 
Further, in its review of Ozark Gas Transmission System (Ozark),5 
a consolidated case, the court found that, based upon the evidence in 
the record, the Commission erred in finding Order No. 497 applicable to 
Ozark Gas Transmission System (Ozark), a joint venture. Accordingly, 
the court remanded the proceeding to the Commission. In response to the 
court's remand, the Commission issued Order No. 497-D which revised 
Sec. 161.3(f) to narrow the scope of the contemporaneous disclosure 
requirement with respect to sales and marketing information, and found 
that Ozark is subject to the requirements of Order No. 497. In 
addition, Order No. 497-D extended the sunset date of Order No. 497's 
reporting requirements from December 31, 1992, until December 31, 1993. 
However, the order stated that 90 days after the Commission has 
determined that an individual pipeline is in full compliance with Order 
No. 636,6 the pipeline would not be required to submit the 
affiliated transportation log (FERC Form No. 592) to the Commission. 
The order stated that the pipeline must continue to maintain and 
provide its affiliated transportation log information on its electronic 
bulletin board (EBB).
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    \1\57 FR 58978 (December 14, 1992), III FERC Stats. & Regs.  
30,958 (1992).
    \2\969 F.2d 1187 (D.C. Cir. 1992).
    \3\Inquiry Into Alleged Anticompetitive Practices Related to 
Marketing Affiliates of Interstate Pipelines, Order No. 497, 53 FR 
22139 (June 14, 1988), FERC Stats. & Regs. [Regulations Preambles 
1986-1990]  30,820 (1988), order on rehearing, Order No. 497-A, 54 
FR 52781 (December 22, 1989), FERC Stats. & Regs. [Regulations 
Preambles 1986-1990]  30,868 (1989), order extending sunset date, 
Order No. 497-B, 55 FR 53291 (December 28, 1990), FERC Stats. & 
Regs. [Regulations Preambles 1986-1990]  30,908 (1990), order 
extending sunset date and amending final rule, Order No. 497-C, 57 
FR 9 (January 2, 1992), III FERC Stats. & Regs      30,934 (1991), 
reh'g denied, 57 FR 5815, 58 FERC  61,139 (1992), aff'd in part and 
remanded in part, Tenneco Gas v. Federal Energy Regulatory 
Commission, 969 F.2d 1187 (D.C. Cir. 1992).
    \4\18 CFR 161.3(f).
    \5\49 FERC  61,247 (1989).
    \6\Pipeline Service Obligations and Revisions to Regulations 
Governing Self-Implementing Transportation; and Regulation of 
Natural Gas Pipelines After Partial Wellhead Decontrol, 57 FR 13267 
(April 16, 1992), III FERC Stats. & Regs. Preambles  30,939 (April 
8, 1992), order on reh'g, Order No. 636-A, 57 FR 36128 (August 12, 
1992), III FERC Stats. & Regs. Preambles  30,950 (August 3, 1992); 
order on reh'g, Order No. 636-B, 57 FR 57911 (December 8, 1992), 61 
FERC  61,272 (1992), reh'g denied, 62 FERC  61,007 (January 8, 
1993).
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    This order (1) deletes the remaining categories of gas sales and 
marketing information from the contemporaneous disclosure requirement, 
(2) affirms the Commission's decision to eliminate the filing of Form 
592, (3) affirms the Commission's decision that Ozark is subject to 
Order No. 497, (4) rejects Hadson Gas Systems, Inc.'s (Hadson) argument 
that the Commission's procedures for acting on Secs. 161.3(j) and 
284.286(e) filings prohibit public participation, (5) requires all 
future standards of conduct filings made under section 161.3(j) and all 
requests for waiver of the standards to include form notices, suitable 
for publishing in the Federal Register, (6) clarifies what type of 
employee is an ``operating employee'' for purposes of the Order No. 497 
regulations, and (7) extends the sunset date of Order No. 497's 
reporting requirements until June 30, 1994, because concurrently with 
this order the Commission is issuing a notice of proposed rulemaking 
(NOPR) in Docket No. RM94-6-000 which proposes to revise Order No. 
497's reporting requirements.

II. Public Reporting Burden

    The public reporting burden under FERC-592, Marketing Affiliates of 
Interstate Pipelines, as revised by Order Nos. 497-D and 636, is 
expected to remain unchanged. Currently, the reporting burden is 
estimated to average 9.94 hours per response, including the time for 
reviewing instructions, searching existing data sources, gathering and 
maintaining the data needed, and completing and reviewing the 
collection of information. Annual reporting requirements under FERC-592 
are expected to total 7,882 hours, based on an estimated 793 responses 
from approximately 61 respondents.
    Issued concurrently with this order is a NOPR in Docket No. RM94-6-
000.7 The NOPR proposes to significantly reduce the FERC-592 
information reporting requirements and burden. Extending the sunset 
date for FERC-592 through June 30, 1994, will give interested parties 
and the Commission time to evaluate the NOPR comments and allow the 
Commission time to prepare a final rule.
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    \7\Standards of Conduct and Reporting Requirements for 
Transportation and Affiliate Transactions.
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    Interested persons may send comments regarding the burden estimates 
or any other aspect of this information collection, including 
suggestions for reductions to the reporting burden, to the Federal 
Energy Regulatory Commission, 941 North Capitol Street, NE., 
Washington, DC 20426 [Attention: Michael Miller, Information Services 
Division, (202) 208-1415, FAX (202) 208-2425]. Comments on these 
reporting requirements may also be sent to the Office of Information 
and Regulatory Affairs of OMB, Washington, D.C. 20503 [Attention: Desk 
Officer for Federal Energy Regulatory Commission (202) 395-6880].
    Hard copy and/or electronic formats for any data collection 
required by this order may be obtained by contacting: La Dorn Systems 
Corporation, room 3308, 941 North Capitol Street, NE., Washington, DC 
20426.

III. Background

    On July 21, 1992, the United States Court of Appeals for the 
District of Columbia Circuit issued its opinion in Tenneco, upholding 
in substantial part Order Nos. 497 and 497-A. However, the court found 
that the Commission did not adequately justify its extension of the 
contemporaneous disclosure requirement of Sec. 161.3(f) to gas sales 
and marketing information. The court stated that ``[o]n remand the 
Commission should reconsider its justification for applying [the 
contemporaneous disclosure requirement of Sec. 161.3(f)] to sales and 
marketing information and ensure that the final requirement is 
reasonably tailored to meet the Commission's goals of improving the 
market and benefitting consumers, as well as preventing undue 
discrimination.'' 8 In a related matter, the court stated that 
``[a]pplying [the contemporaneous disclosure requirement of 
Sec. 161.3(f)] to released-gas information prior to the issuance of 
Order No. 497-A might well be fundamentally unfair'' and that the 
Commission could avoid ``the expense of litigation over this issue by 
announcing that it will not retroactively apply [Sec. 161.3(f)] to 
released gas information.''9 Further, in its review of Ozark, the 
court found that the Commission erred in finding Order No. 497 
applicable to Ozark, a joint venture partnership composed of 
subsidiaries of four natural gas pipelines, each of which has a 25 
percent ownership and voting interest. The court stated that the 
Commission failed to consider relevant evidence regarding the ability 
of the owner pipelines with affiliates to control the partnership.
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    \8\Tenneco Gas v. Federal Energy Regulatory Commission, 969 F.2d 
1187, 1201 (DC Cir. 1992).
    \9\Id. at 1202.
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    On December 4, 1992, in response to the court's opinion in Tenneco, 
the Commission issued Order No. 497-D, an order on remand and extending 
sunset date. Based upon the court's opinion, and in light of the 
structural changes in the gas industry that were to occur as a result 
of Order No. 636, the Commission revised Sec. 161.3(f) to narrow the 
scope of the contemporaneous disclosure requirement with respect to 
sales and marketing information. Under revised standard (f), pipelines 
are still required to contemporaneously disclose information related to 
transportation of natural gas. However, with respect to information 
related to gas sales or marketing, pipelines are only required to 
disclose information relating to sales or marketing on its system or 
the system of an affiliated pipeline. There are two categories of gas 
sales or marketing information that are not required to be 
contemporaneously disclosed: (1) Gas sales or marketing information 
that is available from public sources and (2) information related to 
gas sales off a pipeline's system, but not involving the system of an 
affiliated pipeline. Section 161.3(f) now reads:

    To the extent [a pipeline] provides to a marketing affiliate 
information related to transportation of natural gas, or information 
related to gas sales or gas marketing on its system or the system of 
an affiliated pipeline, it must provide that information 
contemporaneously to all potential shippers, affiliated and 
nonaffiliated, on its system. Pipelines are not required to 
contemporaneously disclose: (1) Gas sales or gas marketing 
information that is available from public sources and (2) 
Information related to gas sales or gas marketing off a pipeline's 
system, but not involving the system of an affiliated pipeline.

    In a related matter, based upon the court's advice, the Commission 
stated that it will not retroactively apply the contemporaneous 
disclosure requirement of standard (f) to released gas information, 
that is, standard (f)'s application to released gas information would 
begin with the issuance of Order No. 497-A.
    With respect to the issue of Order No. 497's applicability to 
Ozark, the Commission found that despite the fact that there is a 
unanimous approval provision in the Ozark partnership agreement, the 
two partners that have parent companies with marketing affiliates 
shipping on Ozark's line can still exercise ``control'' as defined by 
Sec. 161.2 of the Commission's regulations.10 The Commission found 
that even with a unanimous approval provision in the partnership 
agreement, Ozark Pipeline Company and Tennessee Ozark Gas Company, the 
two partners whose parent companies have marketing affiliates, can each 
act alone to direct or effect the management or policies of Ozark Gas 
Transmission System. The Commission stated that since there is a 
unanimous approval requirement, each partner has veto power over any 
decision by simply withholding its vote. The Commission stated that 
such power could be exercised in a manner that could unduly prefer the 
marketing affiliates related to Ozark's partners, for example, by 
either or both partners refusing to engage in an action that would 
benefit an independent marketer in competition with one of Ozark's 
partners' affiliates. The Commission stated that it believed that 
control can be exercised in a negative manner, i.e., by withholding 
approval of a specific policy or transaction, as well as in an 
affirmative manner, i.e., by actually approving a decision that would 
unduly prefer a marketing affiliate.
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    \1\018 CFR 161.2.
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    Finally, the Commission extended the sunset date of Order No. 497's 
reporting requirements from December 31, 1992, until December 31, 1993, 
because of the important role they will play in the regulatory 
structure created by Order No. 636. The Commission stated that although 
Order No. 636 does not change the requirements governing the 
relationship between pipelines and their marketing affiliates, the 
structural changes engendered by full compliance with the rule would 
remove the need to continue filing the affiliated transportation log 
(FERC Form No. 592) with the Commission. The Commission stated that 
Order No. 636's Electronic Bulletin Board (EBB) requirements ensure 
certain minimum standards for maintaining and communicating information 
about a pipeline's available capacity, current capacity release offers, 
and affiliate marketing-related information. The order stated that 
unless further case-specific action is taken by the Commission, 90 days 
after the Commission has determined that a pipeline is in full 
compliance with the requirements of Order No. 636, that pipeline will 
not be required to submit Form 592 to the Commission. The order further 
stated that the pipeline must continue to maintain and to provide its 
affiliated transportation log information on its EBB. Finally, the 
order stated, in practice, this means that pipelines remain subject to 
the standards of conduct and will continue to maintain the information 
mandated by Order Nos. 497 and 636, but will not be required to file 
Form 592 with the Commission.
    On January 4, 1993, requests for rehearing were filed by the 
Indicated Parties (consisting of Conoco, Inc., Anadarko Petroleum 
Corp., Chevron U.S.A., Inc., and Texaco Inc.), Hadson Gas Systems, Inc. 
(Hadson), National Fuel Gas Supply Corporation (National Fuel), the 
Interstate Natural Gas Association of America (INGAA), ANR Pipeline 
Company and Colorado Interstate Gas Company (ANR and CIG), the Joint 
Parties (consisting of Williams Gas Marketing Company, Consolidated 
Natural Gas Company, Midcon Marketing Corp., and Enron Gas Marketing, 
Inc.), CNG Transmission Corporation (CNG), Northwest Pipeline 
Corporation (Northwest), and Ozark Gas Transmission System (Ozark). 
Their requests are discussed below.

IV. Discussion

A. The Revised Contemporaneous Disclosure Requirement

1. Requests for Rehearing
    A number of pipelines (National Fuel, INGAA, ANR, CIG, Tenneco, 
CNG, and Northwest) and the Joint Parties assert that the Commission 
should eliminate from Sec. 161.3(f) the requirement that sales and 
marketing information given to a marketing affiliate must be 
contemporaneously disclosed to all potential shippers because it is 
inconsistent with the court's decision in Tenneco.
    The pipelines and the Joint Parties contend that the revised 
standard provides a limited exclusion for sales and marketing 
information that is available from public sources or is related to off-
system sales or marketing transactions not involving the system of an 
affiliated pipeline but there is no explanation in Order No. 497-D as 
to how so limited an exclusion can be interpreted as responsive to the 
court's remand. The pipelines and Joint Parties argue that the 
Commission's assumption that pipelines obtain sales and marketing 
information in connection with or when combined with transportation is 
not responsive to the court's directive to provide an independent 
justification for barring the exchange of sales or marketing 
information that is wholly unrelated to transportation information. The 
pipelines and the Joint Parties submit that Order No. 497-D evidences 
neither the independent justification required by the court, nor a 
consideration of the action on remand which was suggested by the court. 
The pipelines and the Joint Parties assert that the Commission has not 
examined the relevant data and articulated a satisfactory explanation 
for its action including a rational connection between the facts found 
and the choice made. They argue that the result is an arbitrary and 
capricious order which is unsupported by substantial evidence.
    The pipelines and the Joint Parties contend that Order No. 497-D is 
inconsistent with Order No. 636. They assert that the Commission has 
unequivocally found in Order No. 636 that sales services are 
competitive and has set in motion a restructuring of the pipeline 
industry that is intended to result in competition for sales on an even 
basis by producers, pipelines, and marketers. The pipelines and the 
Joint Parties submit that Order No. 497-D is at odds with Order No. 636 
in its assumption (which is unsupported by record evidence) that 
pipelines possess sales and marketing information which flows from the 
pipelines' anticompetitive market power. They state that, as the 
Commission documented in Order No. 636, most pipeline industry market 
power has already been eliminated, and some individual companies have 
completed the transition to competitiveness by unbundling. They further 
state that to remove the last vestiges of pipeline market power, as the 
Commission sees it in Order No. 636, an industry-wide unbundling is to 
be in place by the start of the 1993-94 heating season.
    The pipelines and the Joint Parties assert that in light of 
unbundling under Order No. 636, it is inexplicable how the Commission 
could see a need to re-promulgate standard (f) with regard to sales and 
marketing information. They state that when Order No. 497 was issued, 
prior to unbundling, the Commission's intent was to prevent 
preferential treatment of an affiliated marketer by an interstate 
pipeline in the provision of transportation services. The pipelines and 
the Joint Parties state that, as recognized by the Commission, 
pipelines have no monopoly power over sales. They assert that it is 
only a pipeline's transportation function which even arguably puts it 
in a position of being able to favor its own marketing affiliates. 
Consequently, they argue that the standards of conduct under Order No. 
497 should only apply to pipeline transportation information.
    The pipelines and the Joint Parties contend that the new 
contemporaneous disclosure requirement in Order No. 497-D imposes 
unnecessary and unreasonable burdens upon pipelines. They state that, 
as Chair Moler noted in her dissent to Order No. 497-D, the standards 
of conduct under Order No. 497 already preclude pipelines from 
disclosing to marketing affiliates any information obtained from non-
affiliated shippers, or otherwise giving any advantages or preferences 
to their marketing affiliates in the provision of transportation 
service. The pipelines and the Joint Parties assert that these 
requirements effectively prevent pipelines from using any remaining 
market power they have over transportation services to benefit their 
marketing affiliates, and make the Order No. 497-D disclosure 
requirements unnecessary. The pipelines and the Joint Parties do not 
believe that in light of all of the current competition in the natural 
gas industry, pipelines have significant market power over 
transportation service. However, to the extent there is any remaining 
market power over transportation service, the pipelines and the Joint 
Parties argue that the Order No. 497 standards of conduct adequately 
address this issue without a need for the contemporaneous disclosure 
requirement for sales and marketing information. They submit that the 
Commission's imposition of the Order No. 497-D contemporaneous 
disclosure requirement only serves to benefit pipeline competitors, and 
imposes unnecessary burdens on pipelines.
    The pipelines and the Joint Parties argue that the Commission cites 
no evidence to support its critical conclusion that the sales and 
marketing information that a pipeline derives from its ongoing 
relationship with its customers is a product of either past or present 
anticompetitive market power. They assert that the Commission's error 
on this point is exacerbated by its lack of jurisdiction to regulate 
the disclosure of sales or marketing information at all. The pipelines 
and Joint Parties state, as the court noted, because the Commission is 
authorized to regulate only those practices that are unduly 
discriminatory or preferential, the Commission appears to lack the 
authority to prevent pipelines from preferring their affiliates with 
exclusive access to sales or marketing information unless that sort of 
preference is undue. The pipelines and Joint Parties contend that the 
Commission cannot resolve questions about the very existence of its 
authority based on nothing more than its sense that the informational 
advantages that a gas marketer derives from an affiliated pipeline 
result from anticompetitive market power rather than the economic 
efficiencies of vertical integration. The pipelines and the Joint 
Parties submit that the contemporaneous disclosure requirement also 
exceeds the Commission's lawful authority because the Commission is 
only empowered to act with respect to any transportation or sale of 
natural gas subject to the jurisdiction of the Commission. They state 
that the contemporaneous disclosure requirement apparently applies to 
the sharing of information regardless of whether a jurisdictional 
service is being performed. The pipelines and the Joint Parties assert 
that there is plainly no lawful basis for the Commission to extend its 
regulation to non-jurisdictional services.
    The pipelines and the Joint Parties argue that even assuming that 
the pipeline generates certain sales and marketing information that is 
not publicly available, mere sharing of this information with an 
affiliate does not translate into a transportation advantage for an 
affiliate, i.e., even if the pipeline informs an affiliate of a 
potential sales market, that does not mean that the pipeline can 
automatically provide the affiliate with the transportation capacity 
necessary to complete the deal. Indeed, they assert that the affording 
of such a preference is precluded under Sec. 161.3(c) which states that 
a pipeline may not give its marketing affiliate preference over 
nonaffiliated customers in matters relating to part 284 transportation, 
including, but not limited to, scheduling, balancing, transportation, 
storage, or curtailment priority. The pipelines and the Joint Parties 
contend that all the Commission's contemporaneous disclosure 
requirement does is to limit the flow of information in the market in a 
manner which hinders competition and serves no legitimate purpose.
    The pipelines and the Joint Parties assert that with the issuance 
of Order No. 636, and the restructuring of all interstate pipelines, 
pipelines will no longer retain any transportation capacity. They state 
that Order No. 636 prohibits a pipeline from retaining or obtaining 
capacity downstream of the point of unbundling on its system except for 
storage needed for system management and balancing for no-notice 
service, and thus all capacity will be allocated to the pipeline's 
shippers. The pipelines and the Joint Parties state that with all of 
the pipeline's capacity in the hands of its shippers, the pipeline will 
have no control over when the capacity will become available. They 
state that availability will depend, to a large degree, on its release 
by firm shipper through the pipeline's capacity release program. 
Moreover, they state when the capacity does become available (either 
through the release program or as interruptible transportation), the 
pipeline will have no control over who will get the capacity. They 
state that the decision will be solely determined by price paid and 
other objective criteria as specified by the releasing shipper and/or 
in the pipeline's tariff. The pipelines and the Joint Parties submit 
that even if a pipeline knew of a particular gas supply and a demand 
for gas in a particular location and proceeded to pass that information 
on to its affiliate, no preferential treatment with respect to the 
provision of transportation services could result. The pipelines and 
the Joint Parties assert that as Order No. 636 has dispelled the 
potential for a pipeline to grant an undue preference with respect to 
transportation services (the purported reason behind Order No. 497), 
the Commission's newly revised contemporaneous disclosure requirement 
constitutes nothing more than an arbitrary prohibition against the 
normal interactions between affiliates, in a manner which places 
pipeline marketing affiliates at an unjustified disadvantage.
    Northwest requests that the Commission clarify that it will not 
apply standard (f) to any conduct regarding sales or marketing 
information prior to the effective date of Order No. 497-D.
    Tenneco requests that the Commission clarify that the 
contemporaneous disclosure requirement for information regarding on-
system sales and marketing information conveyed by the pipeline to its 
marketing affiliate applies only to the transmission of information by 
the transportation personnel of the pipeline and not to transmission of 
information by the unbundled merchant personnel of the pipeline. 
Tenneco believes that such a clarification is reasonable because in the 
post-Order No. 636 environment the unbundled merchant will be the 
functional equivalent of a marketing affiliate because it will not have 
market power over the sale of natural gas. Further, the pipeline 
merchant personnel will be required to operate under the exact same 
restraints with respect to the pipeline transportation personnel that 
marketing affiliate personnel are required to abide by.
2. Commission Ruling
    In Tenneco, the court found that ``the contemporaneous disclosure 
requirement--at least as it affects information regarding 
transportation, where pipelines have monopolistic market power--
reflects a reasonable effort to promote a competitive market without 
significantly harming existing efficiencies.''11 However, with 
respect to the contemporaneous disclosure of gas sales and marketing 
information, the court stated that based on the record it was ``unable 
to conclude that standard (f)'s application to sales and marketing is 
justified; nor can we be confident that FERC possessed the statutory 
authority to regulate the transfer of sales and marketing information 
from pipelines to their affiliates.''12 The court remanded the 
proceeding to the Commission and stated that ``[o]n remand, the 
Commission should consider its justification for applying standard (f) 
to sales and marketing information and ensure that the final 
requirement is reasonably tailored to meet the Commission's goals of 
improving the market and benefitting consumers, as well as preventing 
undue discrimination.''13 Upon further review of the issues raised 
with respect to the disclosure of certain categories of sales and 
marketing information and in light of the court's findings, the 
substantive protection of other standards of conduct (particularly 
standard(e)),14 structural changes in the industry, and the 
restructuring mandated by Order No. 636, the Commission will delete 
from the contemporaneous disclosure requirement of standard (f) the 
remaining categories of gas sales and marketing information. Pipelines 
with marketing affiliates will only be required to contemporaneously 
disclose information related to the transportation of natural gas. The 
Commission now believes that to impose a general requirement of 
contemporaneous disclosure of non-transportation information could have 
a chilling effect on pipelines marketing their gas and does not with 
any degree of certainty improve the market nor benefit consumers. But 
while we are limiting the reach of standard (f), pipelines are not 
relieved of their obligations to refrain from unduly discriminatory 
conduct that is prohibited under the Natural Gas Act or the Natural Gas 
Policy Act, whether or not that conduct is covered by standard (f) or 
any of the other standards. Moreover, while the Commission does not 
choose to continue a standard requiring contemporaneous disclosure of 
certain categories of sales and marketing information at this time, 
this does not bar the Commission from examining such questions, if 
relevant and necessary, in specific cases.
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    \1\1Tenneco at 1199.
    \1\2Id. at 1199.
    \1\3Id. at 1201.
    \1\4Section 161.3(e) states that a pipeline ``may not disclose 
to its affiliate any information the pipeline receives from a 
nonaffiliated shipper or potential nonaffiliated shipper.''
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    The court questioned standard (f)'s applicability to information 
generated by the pipeline ``from public sources, or other sources 
entirely unrelated to a pipeline's transportation service.''15 The 
court also questioned the Commission's assertion ``that the sales and 
marketing information pipelines use today is a result of their `past 
monopoly power over transportation.'''16 Noting that the marketing 
of gas depended on current--not past--information, the court found the 
Commission's position ``counter-intuitive.''17 The court stated:
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    \1\5Id. at 1200.
    \1\6Id.
    \1\7Id.

    The Commission appears to believe that any advantage a pipeline 
gives its marketing affiliate is improper * * * . But advantages a 
pipeline gives its affiliate are improper only to the extent that 
they flow from the pipeline's anti-competitive market power.18
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    \1\8Id. at 1201.

Examined in this light, the Commission now believes that standard (f) 
should be narrowed to affect only the disclosure of information related 
to the transportation of gas.
    Historically, the pipeline collected and maintained extensive data 
on natural gas supply and markets. As the primary--if not exclusive--
buyer and seller of natural gas, pipelines had all of the data on 
production, consumption and markets for the areas they served. However, 
pipelines today are not the dominant sellers of natural gas they were a 
decade ago. About 80 percent of the natural gas pipelines deliver today 
is shipper-owned gas. Indeed, after the Order No. 636-mandated 
restructuring process is complete, nearly 100 percent of natural gas 
deliveries will be shipper-owned gas. Also, other structural changes in 
the industry further weaken the pipeline's knowledge base. 
Increasingly, contract pricing relies on nationwide competitive and 
financial market determinations, such as the NYMEX futures market, and 
published spot prices. Also, Order No. 636 establishes a short-term 
capacity release program for transactions less than 30 days in duration 
where even the EBB bidding requirements are waived. Pipelines will be 
afforded substantially less information about these types of 
transactions than traditionally required. For these transactions 
pipelines know where the gas is entering their system, and where it is 
redelivered, but may know nothing about the extent of reserves, the 
producers' or consumers' circumstances, or the commercial terms of the 
sale itself. Often the pipeline does not even know the identity of the 
ultimate consumer. Indeed the theory underlying Order No. 636 is that 
shippers would have more access to producers and marketers to make 
their decisions.
    But just as important is the fact that other shippers and producers 
will know where gas is entering and being redelivered throughout the 
system. Order No. 636 requires that this type of information be 
provided during the restructuring process, and through the EBB posting 
requirement required during the right-of-first-refusal, and capacity 
release programs.
    To the extent that a pipeline collects sales and marketing 
information from public sources, or from sources outside its 
transportation role, release of this information to its marketing 
affiliate generally does not in any way relate to the pipeline's 
monopoly power over transportation. Unnecessary interference with 
communications between a pipeline and its marketing affiliates would 
actually reduce competition, by inhibiting one segment of the industry 
from vigorously competing with other natural gas sellers. To do 
otherwise would create an unlevel playing field tilted against pipeline 
merchant service units or marketing affiliates and towards producers, 
nonaffiliated marketers, local distribution companies (LDCs), and 
others. Rather than a balanced approach, this tilted playing field 
would give an unfair advantage to non-pipeline merchants.
    The pipeline obtains sales and marketing information from the 
public domain, its bundled merchant function or its transportation 
activities. The public domain information should not trigger standard 
(f), following the Tenneco court's reasoning. The bundled merchant 
information is outdated and does not meet the current information 
standard mentioned by the court. And finally, the transportation-
generated sales and marketing information cannot be shared with the 
affiliate in the first instance given the standard (e) 
prohibition.19
---------------------------------------------------------------------------

    \1\9The only sales and marketing information which could result 
from a pipeline abusing its monopoly transportation position by 
sharing with a marketing affiliate would come from nonaffiliated 
shippers or potential shippers. Since standard (e) prohibits the 
pipeline from sharing any information derived from those sources 
with its marketing affiliate, the act of sharing such sales and 
marketing information both violates standard (e) and triggers the 
requirement to comply with standard (f).
---------------------------------------------------------------------------

    Standards (f) and (e) are compatible with respect to transportation 
information--pipelines could generate and communicate transportation 
information to their marketing affiliates without violating standard 
(e). For example, as a result of its own engineering flow analysis, a 
pipeline could develop information concerning capacity availability. If 
that information is shared with a marketing affiliate, standard (f) is 
triggered. But since the information was not obtained by the pipeline 
from a nonaffiliated shipper or potential shipper, standard (e) is not 
violated.
    In addition to the protections provided by standard (e), standard 
(c) also provides an adequate safeguard against affiliate abuse. 
Standard (c) states:

    [A pipeline] may not, through a tariff provision or otherwise, 
give its marketing affiliate preference over nonaffiliated customers 
in matters relating to part 284 transportation including, but not 
limited to, scheduling, balancing, transportation, storage, or 
curtailment priority.20
---------------------------------------------------------------------------

    \2\018 CFR 161.3(c).

    While these reasons themselves compel modification of standard (f), 
further changes in the industry structure, and in pipelines' operations 
mandated by Order No. 636 provide additional support. Order No. 636 
will both level the playing field for all competitors, and increase the 
amount of capacity information available from EBBS to all potential 
shippers--marketing affiliates and all other sellers, marketers, 
transporters and consumers alike.
    First, Order No. 636 requires pipelines to unbundle their own sales 
from the transportation service. To do this each pipeline is required 
to establish separate operating staffs for pipeline (transportation) 
operations and merchant operations (merchant function operating unit). 
Each pipeline is also required to treat its merchant function operating 
unit as if it were a marketing affiliate, for purposes of compliance 
with the standards of conduct and reporting requirements of Order No. 
497, et seq. In practice, many pipelines are establishing separate 
affiliates to provide the merchant services required by Order No. 636. 
This change should further reduce the likelihood that a pipeline would 
even have sales or marketing information to pass along to its marketing 
affiliate (or merchant function operating unit). Indeed, whatever sales 
and marketing information a pipeline would have developed from public 
sources would, for the most part, be available to all other competitors 
on a similar basis.
    In Tenneco the court found

    [N]o evidence in the record--and FERC points to none--for the 
assertion that the sales and marketing information pipelines use 
today is a result of their ``past monopoly over transportation.'' 
The [FERC's] assertion strikes us as counter-intuitive. The sales 
and marketing of gas would seem to depend on current information--a 
surmise that is supported by evidence in the record that pipelines' 
sales and marketing information includes information developed 
through ongoing customer calls and reviews of filings with state and 
federal regulatory agencies, trade publications, and market 
reports.21
---------------------------------------------------------------------------

    \2\1Id. at 1200.

    This represents a significant change from past practices. When 
pipelines were the primary merchants in the interstate marketplace, 
merchant services were provided under long-term contracts on an ``on 
demand'' basis. While the pipelines had all of the industry's 
information available to them, and operational control over all of the 
functions, this information was aggregated over both time (monthly) and 
markets. Increasingly, today's merchant services focus on individual 
customers and are adjustable on a daily or even hourly basis. The 
information needed to drive the old-style merchant services is neither 
compatible with nor sufficient to meet the demands of today's 
marketplace.
    Second, all future sales of gas will take place at pipeline receipt 
or pooling points. This requires that the pipeline, acting as a 
merchant, and the pipeline's marketing affiliates must sell gas at the 
same point on the system as other gas sellers. This places all other 
natural gas sellers on a level playing field with marketing affiliates 
and the pipeline as a merchant. And because the Commission has mandated 
that pipelines allow all shippers flexible receipt, pooling, and 
delivery point authority, all shippers should have equal access to 
available capacity throughout the system. The designation of pooling 
points, the pipeline's point of sale for merchant services, and the 
terms and conditions governing flexible point authority are all subject 
to negotiations among the pipeline and the parties in individual 
restructuring proceedings--not subject to the pipeline's sole 
discretion to decide. The result of negotiations over these significant 
operating terms and conditions must ultimately be filed by the 
pipelines as part of their FERC tariffs and apply equitably to all 
shippers whether they purchase from the pipeline or anyone else.
    Third, pipelines are encouraged in the Order No. 636 restructuring 
process to minimize transition costs by assigning--on a voluntary non-
discriminatory basis--gas supply contracts to their former sales 
customers. Pipelines are also allowed 100 percent recovery of 
transition costs. These transition provisions are designed to fairly 
distribute the burden of the historic legacy of uncompetitive pipeline 
purchase arrangements. Coupled with removal of burdensome regulatory 
pricing structures, pipeline merchant function operating units should 
be left in a position to compete fairly with other merchants without 
being saddled with the costs of uncompetitive purchase contracts.
    Fourth, Order No. 636 requires pipelines to establish and maintain 
EBBs and requires that EBB personnel function independently of the gas 
marketing personnel to the maximum extent practicable. Identification 
of some of the data to be maintained on the EBB is the subject of 
negotiation between the pipeline and the parties to the restructuring 
proceedings. However, other data are required by Order No. 636 to be on 
the EBB at all times, e.g., length of release, rate, quantity, criteria 
for bid evaluation (which criteria was determined during the 
restructuring proceeding) and the pipeline must identify all capacity 
on its system which is available directly from the pipeline. 
Implementation of these EBBs will give all shippers and potential 
shippers instant access to the most current information about the 
availability of pipeline capacity.
    Finally, Order No. 636 creates a capacity releasing program. Under 
this program, firm shippers of the pipeline are allowed to resell their 
capacity, in whole or in part, and under terms and conditions they 
choose, to the highest bidding replacement shipper. Releasing shippers 
are also allowed to include specific provisions for the recall of 
released capacity, e.g., when temperatures drop below a pre-set minimum 
level. Releases may be either permanent or temporary, firm or 
interruptible. Coupled with flexible receipt and delivery point 
authority, the capacity release program will allow existing firm 
shippers to sell their capacity in the pipeline to others. This will 
create competition for capacity against the pipeline itself. Although 
the pipeline would continue to operate the system, it would no longer 
be in sole control over who has access to capacity. Again, the 
pipelines and their shippers are expected to work together in 
implementing the Order No. 636 restructuring process to decide how the 
pipeline will operate in the new unbundled world.
    With respect to Northwest's request, the Commission clarifies that 
it will not apply standard (f) to any conduct regarding sales or 
marketing information prior to the effective date of Order No. 497-D.
    Tenneco's request that the Commission clarify that the 
contemporaneous disclosure requirement for information regarding on-
system sales and marketing information conveyed by the pipeline to its 
marketing affiliate applies only to the transmission of information by 
the transportation personnel of the pipeline and not to transmission of 
information by the unbundled merchant personnel of the pipeline is 
moot. The Commission notes, however, that standard (f), in any form, 
applies only to the pipeline in its relationship with its marketing 
affiliate, and now, because of Order No. 636, its unbundled merchant 
division is the functional equivalent of a marketing affiliate.

B. The Elimination of the Filing of Form 592

1. Requests for Rehearing
    The Indicated Parties assert that the Commission erred in 
permitting interstate pipelines to cease to submit the affiliated 
transportation log (Form 592) 90 days after the Commission has 
determined that an individual pipeline is in full compliance with Order 
No. 636. The Indicated Parties submit that the information available on 
Form 592 may be more essential after a pipeline complies fully with 
Order No. 636 than it is now. The Indicated Parties state that 
following full compliance with Order No. 636, an interstate pipeline 
will be permitted to sell natural gas at negotiated prices. In this 
environment, the Indicated Parties argue that such a pipeline may be 
motivated to favor its own sales of gas as well as sales made by its 
marketing affiliates. For example, the Indicated Parties contend that 
to obtain a sale at the expense of other sellers, a pipeline could sell 
its gas at a loss or a very low price, but charge the full 
transportation rate. The Indicated Parties assert that this would allow 
the pipeline to avoid the correlative discount rule under 
Sec. 161.3(i), and charge all other sellers the maximum transportation 
rate rather than discounting to obtain the transportation business. The 
Indicated Parties argue that to remain competitive, non-affiliated 
sellers would be forced to reduce their gas prices below what they 
would charge if the pipeline discounted its transportation rates rather 
than the price at which the pipeline merchant function sells its gas. 
The Indicated Parties contend that the non-affiliated sellers would 
suffer a loss because they would be forced to sell their gas at a loss 
and pay the full transportation rate. The Indicated Parties assert that 
the pipeline, however, would not suffer the same economic detriment 
because it would receive the full transportation rate on the movement 
of its gas. The Indicated Parties submit that they and other competing 
merchants will be unable to monitor and detect such favoritism without 
the information provided on Form 592.
    The Indicated Parties assert that the difficulty with the 
elimination of the filing of Form 592 is that the Commission and the 
industry have no experience with the operation of EBBs by a pipeline in 
full compliance with Order No. 636. The Indicated Parties argue that 
the Commission cannot find that the EBBs will prove to be a reliable 
and accurate source of the information now supplied on Form 592. The 
Indicated Parties state that in light of this practical experience, the 
Commission recently requested comments on the configuration and 
operation of EBBs in Docket No. RM93-4-000. The Indicated Parties state 
that in the list of questions on which comments were requested the 
Commission asked whether ``any of this information [available on the 
EBBs can] be used to fulfill existing FERC reporting requirements?'' 
The Indicated Parties contend that this request demonstrates that the 
EBBs are an unproven means of communicating the information now 
available on Form 592. The Indicated Parties state that even though it 
had requested comments on whether it could eliminate any of its current 
reporting requirements, the Commission, without even waiting for an 
answer to its question, erroneously assumed in Order No. 497-D that the 
answer would be ``yes'' and eliminated one of its reporting 
requirements. The Indicated Parties submit that the disparity between 
the requests for comments and the elimination of a reporting 
requirement in Order No. 497-D demonstrates that the Commission acted 
in an arbitrary and capricious manner without substantial evidence in 
eliminating the filing of Form 592. The Indicated Parties assert that 
the Commission has failed to protect the public interest with its 
elimination of the requirement that pipelines file Form 592. The 
Indicated Parties argue that the Commission should grant rehearing and 
reinstate the requirement that pipelines file Form 592.
    Hadson also asserts that the Commission erred in eliminating the 
filing of Form 592. Hadson states that under Order No. 636 pipelines 
will be able to conduct an essentially deregulated gas merchant 
business under the pipeline's corporate entity and while sharing key 
personnel. Hadson contends that this arrangement, which it does not 
oppose in and of itself, nonetheless creates additional opportunities 
for the pipeline-transporter to favor both its own merchant division as 
well as its affiliates and that this increases rather than diminishes 
the need for public scrutiny. Hadson argues that, at a minimum, 
deregulating the pipeline-merchant can certainly not be invoked as 
grounds for a decrease in the need for public monitoring by the 
industry watchdog. Finally, Hadson notes that even requiring the same 
information to be disclosed on an EBB is materially different from 
requiring the information to be filed with the Commission under the 
Natural Gas Act since filings with the Commission are subject to 18 
U.S.C. 1001 while postings on an EBB are probably not.
    Tenneco asserts that while the Commission recognized in Order No. 
497-D that the EBB requirements in Order No. 636 obviate the need for 
pipelines to file Form 592 with the Commission, the Commission failed 
to recognize that certain information currently required in Form 592 
will have little use to anyone in the post-Order No. 636 world.
    Tenneco states that Item Nos. 7 and 8 require that a pipeline 
report the position of its marketing affiliate in the pipeline's 
transportation queue and the total number of requests in the queue 
respectively. Tenneco submits that in the unbundled world pipelines 
will allocate available capacity among requesting shippers not on a 
first-come, first-served basis, but on the basis of the relative value 
of the request to the pipeline. Tenneco states that the value of the 
requests for transportation will involve a calculation based on the 
price offered and the term of the request, and the precise method of 
determining which offer has the highest value to the pipeline will be 
stated in the pipeline's tariff. Tenneco asserts that without a first-
come, first-served queue in effect, there is no advantage to be gained 
by maintaining these two information requirements. Tenneco further 
asserts that the pipeline capacity release programs will provide yet 
another avenue through which shippers desiring firm transportation 
capacity can obtain it, thus further reducing the utility of the 
required information. Tenneco contends that these changes brought about 
by Order No. 636 will thus eliminate the need for pipelines to report 
the queue position of their marketing affiliates and the total number 
of requests in the queue.
    Tenneco states that Item Nos. 23 and 24 require pipelines to report 
whether or not the pipeline will receive take-or-pay credits for 
transporting an affiliate's gas and what percentage of the gas 
transported will be subject to credit. Tenneco states that because the 
Commission's take-or-pay crediting program terminated on December 31, 
1990, pipelines have not been able to receive take-or-pay credits since 
December 31, 1990. Therefore, Tenneco asserts that maintaining this 
requirement serves no purpose.
    Tenneco states that Item No. 32 requires pipelines to identify the 
location of the producing fields from which gas requested to be 
transported for an affiliate originates. Tenneco argues that with the 
implementation of flexible receipt and delivery points and capacity 
release, this information becomes useless. Tenneco contends that 
shippers will be using secondary receipt points on their own contracts 
and acquiring each other's capacity much more than they have 
historically. Tenneco asserts that this is precisely the outcome that 
the Commission is trying to bring about by mandating flexible receipt 
and delivery points and capacity release. Tenneco submits that with 
this increase in the number of transportation transactions that involve 
the use of points other than the primary receipt or delivery point of 
the entity requesting transportation, requiring pipelines to report 
this information serves no purpose.
    Tenneco states that Record No. 3 requires pipelines to report 
requested receipt and delivery points for transportation requests of 
their marketing affiliates. Tenneco asserts that the advent of flexible 
receipt and delivery points renders this information useless. Tenneco 
argues that the marketing affiliate, like any other shipper, will have 
the firm right to use any receipt or delivery point on the system to 
the extent that capacity is available. Thus, Tenneco contends the 
utility of maintaining a list of requested receipt and delivery points 
is vastly diminished.
    Because the information required by Item Nos. 7, 8, 23, 24, and 32 
of Schedule 2 and all of Schedule 3 will no longer have value after 
full compliance with Order No. 636, Tenneco requests that the 
Commission clarify that this information need not be maintained on 
pipelines' EBBs. Tenneco asserts that eliminating the requirement to 
report it is consistent with the Commission's goal to decrease 
needlessly burdensome regulation. Tenneco requests expedited action on 
this issue as pipelines are currently setting up their EBBs, and a 
swift affirmative response will enable the new EBBs to more accurately 
reflect the required information.
2. Commission Ruling
    The Commission denies the Indicated Parties' and Hadson's requests 
for rehearing. Their arguments lose sight of the fact that the Form 592 
information must still be provided electronically, thus allowing 
interested parties and the Commission staff to monitor the activities 
of pipelines and their affiliates and to initiate the appropriate 
action when evidence of discrimination in favor of affiliates exists. 
The Indicated Parties' concerns about obtaining reliable and accurate 
Form 592 information are unfounded. Section 250.16(g)(2) states that:

    An interstate pipeline must provide 24-hour access, by 
electronic means, to the data specified in paragraph (b)(2) of this 
section. Access to the information must be provided once the service 
has begun. A pipeline must, on a daily basis, either update the 
information or indicate that no changes have occurred in the log 
information.

    Most pipelines satisfied this requirement through the use of EBBs 
in the past, and Order No. 636 now mandates EBBs. Interested parties 
have been receiving and will continue to receive the Form 592 
information electronically. Thus, the Indicated Parties' argument that 
the Commission and the industry have no experience with EBBs is 
inaccurate. Moreover, the requirements of Order No. 636 ensure that 
each pipeline's Order No. 497 EBB must provide for: (a) Downloading by 
users; (b) daily back-up of information, which must be available for at 
least three years; (c) purging information on completed transactions 
from current files; (d) display of most recent entries ahead of 
information posted earlier; and (e) on-line help, a search function and 
a menu that permits users to separately access records in the 
transportation log and standards of conduct information.22 These 
features allow shippers to take the information that is currently filed 
on Form 592s off the pipelines' EBBs and obtain access to the 
information up to three years after it is posted.23 In these 
circumstances, the burden on the pipelines from filing Form 592s and 
the administrative burden on the Commission from collecting them 
outweighs any benefits of collecting the data in hard copy.
---------------------------------------------------------------------------

    \2\218 CFR 284.8(b)(4) and 284.9(b)(4).
    \2\318 CFR 284.8(b)(4) and 284.9(b)(4).
---------------------------------------------------------------------------

    The Commission also does not believe that Hadson's argument relying 
on 18 U.S.C. 1001 is a valid reason for maintaining the Form 592 filing 
requirement. Section 1001 states:
    Whoever, in any matter within the jurisdiction of any department 
or agency of the United States knowingly and willfully falsifies, 
conceals or covers up by any trick, scheme, or device a material 
fact, or makes any false, fictitious or fraudulent statements or 
representations, or makes or uses any false writing or document 
knowing the same to contain false, fictitious or fraudulent 
statement or entry, shall be fined not more than $10,000 or 
imprisoned not more than five years, or both.


Hadson's argument implies that because a hard copy of the Form 592 
information will not be filed with the Commission pipelines will 
knowingly provide inaccurate or incorrect information through 
electronic means. The Commission believes that the language of the 
statute is broad enough to cover electronic postings. However, in order 
to prevent any such fraudulent conduct, the Commission deems the 
electronic posting of the Form 592 information equivalent to a filing 
for purposes of 18 U.S.C. 1001.
    Since contemporaneously with this order the Commission is issuing a 
Notice of Proposed Rulemaking (NOPR) which proposes to revise Order No. 
497's reporting requirements, including Form 592, the Commission will 
not address Tenneco's request to delete certain parts of Form 592.

C. Application of Order No. 497 to Ozark

1. Request for Rehearing
    Ozark asserts that the Commission's order on remand ignores the 
court's instructions requiring the Commission to consider the effect of 
Ozark's evidence on the question of control. Ozark contends that it 
simply relies upon an equally deficient rationale for concluding, 
without reference to any evidence, that Tennessee Ozark and Ozark 
Pipeline Corporation each, individually, ``controls'' Ozark, thereby 
making the marketing affiliates of those partners marketing affiliates 
of Ozark. Ozark submits that to avoid problems inherent in finding that 
these partners can exercise ``affirmative control'' over Ozark, the 
Commission concluded that they can exercise ``negative control'' by 
simply withholding their vote and vetoing any transportation 
transaction that would compete with their respective marketing 
affiliates.
    Ozark argues that the ability to withhold a vote or ``veto'' any 
particular transaction does not exist as far as open access 
transportation arrangements are concerned. Ozark states that open 
access pipelines, including Ozark, are required by Secs. 284.8(b) and 
284.9(b) to transport natural gas on an open and non-discriminatory 
basis. Ozark asserts that it is clearly prohibited from taking actions 
that would unduly prefer the marketing affiliates of Ozark's partners 
and Ozark's partners have an obligation to the partnership to operate 
the pipeline within legal parameters.
    Ozark submits that its Commission-approved firm and interruptible 
rate schedules establish the criteria which control who receives 
transportation service from Ozark. Ozark contends that decisions as to 
who will be permitted to ship on Ozark may not be made at the whim of a 
particular Ozark partner. Ozark asserts that if the tariff criteria are 
met, the request must be granted. Ozark states that, in fact, at a 
Management Committee meeting held on June 26, 1991, Ozark's Management 
Committee, consisting of representatives of each of the partners, voted 
unanimously to approve a resolution authorizing the President of Ozark 
or his designee to execute interruptible transportation agreements on 
behalf of Ozark. Thus, Ozark contends, each of the partners ceded to 
the Operator the authority to enter into interruptible transportation 
agreements. Ozark argues that no partnership vote is required and the 
Operator is bound by the tariff. Ozark asserts that it should be 
obvious that not only are Tennessee Ozark and Ozark Pipeline 
Corporation not free to veto transportation transactions but each has 
relinquished any right it might otherwise have to vote on such 
transactions.
    Ozark submits that the record before the Commission shows an 
absence of control. Ozark asserts that the record before the Commission 
shows a complete absence of any vetoing of any transportation 
transaction by any Ozark partner, consistent with the delegation of 
authority to enter into such transportation agreements. Ozark argues 
that the Operator is required to act in accordance with its fiduciary 
responsibilities to the partnership, not inconsistent with those 
responsibilities. Ozark contends that the Commission's finding here 
that one partner could prefer its marketing affiliate by vetoing 
transportation for others is directly contrary to the Commission's 
prior findings in this case that ``[t]here are no facts before us in 
this proceeding which indicate that Ozark has discriminated in offering 
transportation services to any party.''24
---------------------------------------------------------------------------

    \2\4Citing, Ozark Gas Transmission System, 43 FERC 61,443 at 
62,108 (1988).
---------------------------------------------------------------------------

    Ozark submits that previously the Commission assumed that the Ozark 
partners would act together to provide preferences to marketing 
affiliates of one of the partners or that one of the Ozark partners 
would be willing to grant preferences to their Ozark partners in the 
hopes of obtaining reciprocal preferences. Ozark states that here the 
Commission assumes that one of the partners will simply veto 
transactions that would benefit the partnership because the transaction 
might compete with a transaction of one of its affiliates. Ozark 
asserts that there is no evidence to support any such assumption. Ozark 
contends that to make such a finding the Commission would have to 
assume that Ozark would violate its tariff, the Commission's 
regulations, and Texas partnership law. Ozark argues that the 
Commission would also have to assume that its prior finding that there 
are no facts showing discrimination in Ozark's offering of 
transportation is wrong. Ozark submits that not one of these 
assumptions is logical, consistent with any information relating to 
Ozark, or supported by evidence in the record. Ozark asserts that all 
of the evidence shows that such control does not exist including the 
fact that numerous transportation transactions have been conducted by 
Ozark for independent marketers which compete with the marketing 
affiliates of Ozark partners.
    Ozark states that its decisions as to who it will ship for are 
subject to review by this Commission and this Commission's complaint 
procedures. Ozark contends that if the Commission were to find that 
Ozark had engaged in such conduct, enforcement proceedings would 
commence and Ozark would either be ordered to provide the service 
required or its blanket certificate would be revoked.
    Finally, Ozark argues that it does not control any of its 
individual partners, is not controlled by any of its individual 
partners, and is not under common control with any of its individual 
partners. It asserts that nothing in the record before the Commission 
suggests the contrary.
    Ozark also contends that the Commission erred to the extent that it 
relied on the modified definition of ``control.'' Ozark states that in 
Order No. 497-A the Commission modified the definition of ``control'' 
in Sec. 161.2. Ozark states that on January 16, 1990, it sought 
rehearing of Order No. 497-A. Ozark states that the Commission issued 
an order granting rehearing for purpose of further consideration but 
the Commission has never, to the best of Ozark's knowledge, issued an 
order on the merits of Ozark's rehearing request. Ozark states that 
three years have passed and numerous orders utilizing the definition 
have issued, including the order in this proceeding, and it considers 
its request for rehearing as having been denied. However, to the extent 
that the Commission is applying the revised definition to support the 
result here, Ozark seeks rehearing.
    Ozark asserts that the Commission's order is not at all clear 
whether it is relying upon the modified definition of ``control'' to 
support its decision here. If the Commission's decision rests at all on 
``whether acting alone or in conjunction with others'' language, Ozark 
submits that the Commission's decision is in error. Ozark argues that 
the effect of the additional language is to establish ``control'' in a 
1% voting interest owner of a corporation. Ozark asserts that the 
language creates an irrebuttable presumption of ``control'' by anyone 
holding at least a 10% voting interest in a corporation, contrary to 
the clear statement in the balance of the regulation that the 
presumption of control is rebuttable. Ozark contends these two effects 
result from the indisputable fact that any interest holder must act 
with the requisite plurality in order for any particular action to be 
taken by a corporation or a partnership. Ozark states that in its case 
unanimity is required for most actions so all partners must vote in the 
affirmative in order for particular action to be taken. Ozark asserts 
that the fact that unanimity is required, again, does not constitute 
control but, rather, evidences a lack of control. Accordingly, Ozark 
submits that the modified definition is inconsistent with the existence 
of a rebuttable presumption, is arbitrary and capricious, and lacks any 
basis in reasoned decisionmaking.
2. Commission Ruling
    The Commission rejects Ozark's request for rehearing. Ozark argues 
that the Commission's definition of ``control'' is inconsistent with 
the existence of a rebuttable presumption. We disagree. Section 161.2 
states that ``control (including the terms `controlling,' `controlled 
by,' and `under common control with') includes, but is not limited to, 
the possession, directly or indirectly and whether acting alone or in 
conjunction with others, of the authority to direct or cause the 
direction of the management or policies of a company. A voting interest 
of 10 percent or more creates a rebuttable presumption of 
control.''25 In Order No. 497-A, the Commission specifically 
addressed the issue of joint venture pipelines and stated that 
overlapping interests create an incentive to grant an affiliate 
preference.26 The Commission applied the definition in section 
161.2 to several pipelines that had requested rehearing, including High 
Island Offshore System, U-T Offshore System, Trailblazer Pipeline 
Company, Sea Robin Pipeline Company, Northern Border Pipeline Company 
and Great Lakes Gas Transmission Company.27 In Tenneco, the court 
upheld the definition of control and the way in which the Commission 
applied it to Northern Border Pipeline Company. In considering Ozark's 
petition for review, the court remanded the Commission's application of 
the term ``control'' but not the definition of the term. Thus, Ozark's 
request for review of the definition of control is a collateral attack 
on Order No. 497-A and the Commission rejects it.
---------------------------------------------------------------------------

    \2\518 CFR 161.2.
    \2\6Order No. 497-A at 31,593.
    \2\749 FERC 61,340 (1989).
---------------------------------------------------------------------------

    To consider whether there is control here, we will review all the 
evidence Ozark has submitted on the issue. On March 10, 1987, Ozark 
filed an application under section 7 of the Natural Gas Act for a 
certificate of public convenience and necessity. In that application, 
Ozark stated that it is a partnership and submitted its partnership 
agreement, which shows that Ozark is jointly owned by four 
partners,28 that the partnership will be managed by a management 
committee, which will consist of equal representatives from each 
partner, and will be operated by OPGC. In addition, OPGC selects the 
President of Ozark, who also acts as the CEO and the Chairman of the 
management committee. On July 5, 1988, Ozark emphasized that its 
General Partnership agreement specifies that no action may be taken by 
the management committee except by unanimous approval. On January 3, 
1993, Ozark presented, for the first time, a partial copy of a 
corporate resolution dated June 26, 1991. This states that ``the 
President of Ozark or his designee is hereby authorized to execute 
interruptible transportation agreements on behalf of Ozark.'' Because 
Ozark's partners ceded to the President the authority to enter into 
interruptible transportation agreements, no partnership vote is 
required. All of Ozark's firm capacity is committed to Tennessee Gas 
Pipeline Company and Columbia Gas Transmission Corporation. Therefore, 
Ozark claims that its partners cannot ``control'' transportation either 
affirmatively or negatively through veto power.
---------------------------------------------------------------------------

    \2\8Ozark's owners are:
    1. Ozark Gas Pipeline Corporation (OPGC), which is a direct 
subsidiary of USX Corporation. Other subsidiaries include, TXO 
Production Company, Marathon Oil Company and Delhi Gas Marketing 
Corporation. The activities of TXO Production Company, the marketing 
affiliate, have been subsumed into Marathon Oil Company. However, 
TXO Production Corporation still ships on Ozark, as does Delhi Gas 
Marketing Corporation, another marketing affiliate.
    2. Tennessee Ozark Gas Pipe Company, which is a wholly-owned 
subsidiary of Tennessee Gas Pipeline Company, which is in turn, a 
wholly owned subsidiary of Tenneco, Inc. Tennessee's marketing 
affiliate is Tenngasco Corporation (Tenngasco), which is a shipper 
on Ozark.
    3. Columbia Gulf Transmission, which is a wholly-owned 
subsidiary of the Columbia Gas System, Inc. Columbia Gas' marketing 
affiliate, Columbia Gas Development Corporation ships on Ozark; and
    4. Caney River Transmission Company, which is a wholly-owned 
subsidiary of ONEOK, Inc.
---------------------------------------------------------------------------

    We disagree. The partners still have authority to direct the 
management and policies of Ozark and could, at any time, revoke the 
authority over interruptible transportation from the President. 
Moreover, under the terms of the partnership agreement, OPGC selects 
the President of Ozark and operates Ozark. OPGC's marketing affiliates 
ship on Ozark. OPGC has the requisite control described in section 
161.2 of the Commission's regulations because it operates Ozark and, 
through the President it selects, manages the pipeline.
    In addition, ``control'' is not limited to authority over firm or 
interruptible transportation. Informal actions of the management 
committee or the partners could provide the marketing affiliates with 
significant advantages, such as non-public transportation information. 
For example, if Ozark intends to build a new pipeline under Part 284 of 
the Commission's regulations, the partners could convey that 
information to their marketing affiliates, and the marketing affiliates 
would have an advantage over nonaffiliated marketers in obtaining 
customers. Likewise, information with respect to the addition of new 
receipt of delivery points could be of significant advantage to the 
marketing affiliates.
    Ozark also states that it has not discriminated in the past and 
that no Ozark partner has vetoed any transportation transactions. Ozark 
asserts that its operating structure together with its history should 
serve to successfully rebut a presumption of control. But the partners' 
ability to control the management and policies of the pipeline is not 
linked to whether Ozark has discriminated in the past. In Order No. 
497, the Commission found sufficient anticompetitive conduct industry-
wide to substantiate the need for the rule. The court upheld the rule 
in Tenneco. The Commission need not produce evidence of discrimination 
with respect to each pipeline to justify application of the rule to any 
one pipeline.
    Finally, Ozark argues that it is subject to the undue 
discrimination provisions of section 4 of the NGA and therefore will 
not discriminate in favor of its affiliates.29 Despite these 
prohibitions, the Commission found the need for additional guidelines 
to deter anticompetitive conduct and concluded in Order No. 497 that 
standards of conduct and reporting requirements were 
appropriate.30 Ozark's argument that it should not be subject to 
Order No. 497 because it is subject to other regulations is 
inconsistent with the purposes of Order No. 497.
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    \2\9Section 4 of the NGA as well as 18 CFR 284.8(b) and 284.9(b) 
generally prohibit a pipeline from granting an undue preference to 
any person.
    \3\0Notice of Proposed Rulemaking on Inquiry Into Alleged Anti-
Competitive Practices Related to Marketing Affiliates of Pipelines, 
52 FR 21578 (June 8, 1987), FERC Stats. & Regs. 32,445 at 33,563-5 
(1987).
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D. Standards of Conduct Filings

1. Request for Rehearing
    Hadson asserts that the Commission's procedures for acting on 
Secs. 161.3(j) and 284.286(e) filings are illegal. Hadson states that 
the Commission treats these filings as non-tariff filings which are 
assigned an MG docket prefix. Hadson states that according to 
Sec. 161.3(j) the filings are made to enable shippers and the 
Commission to determine how the pipeline is complying with the 
substantive standards of conduct. Hadson submits that the filings 
cannot achieve this purpose, however, since they are withheld from 
public notice in the Federal Register and in the Commission's daily 
orders. Hadson contends that they are effectively concealed from public 
view in the great majority of cases since shippers and other interested 
members of the public have no way of knowing when to look to find a new 
or revised MG filing.
    Hadson states that, moreover, the Commission has ruled that the MG 
filings are non-adversarial and that the Commission may therefore rely 
upon non-public and off-the-record communications in determining 
whether a pipeline is in compliance with the substantive standards or 
not.31 Hadson states that the Commission has further ruled that no 
one may protest or intervene in the non-public proceedings. Hadson 
states that any attempt to assert that a compliance filing is not in 
compliance with the law will be redocketed in a new proceeding and 
treated as a complaint in which the erstwhile protestant bears the 
burden of conducting discovery to prove that a pipeline's compliance 
filing is not in compliance with the law, rather than the pipeline 
being responsible for showing compliance.\32\
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    \3\1Citing, ANR Pipeline Co., et al., 55 FERC 61,260 at 61,833, 
n. 6 (1991), order on reh'g and clarification sub nom., Algonquin 
Gas Transmission Co., et al., 58 FERC 61,143 (1992).
    \3\2Id.
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    Hadson argues that similar problems taint the filings under section 
284.286 since Order No. 636 appears to generally incorporate the 
existing procedures and relies upon them to support the effective 
deregulation of the unbundled pipeline merchants under the Subpart J 
certificates. Hadson states that the basis for this conclusion is that 
Order No. 636 appears to maintain the dichotomy between tariff 
provisions (which presumably would be made in an MT or successor 
docket) and procedures (which filing requirement, the Commission 
states, would be similar to that of Sec. 161.3(j)).33 Hadson 
asserts that the primary difference between the new and the current 
procedures, and the only apparent reason for not incorporating 
Sec. 161.3(j) along with the various other sections which were 
incorporated by reference, is that the new rules have deleted the 
statement that the filing will enable shippers and the Commission to 
determine how a pipeline is complying with the standards of conduct.
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    \3\3Citing, Order No. 636, III FERC Stats. & Regs. at 30,442, n. 
232.
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    Hadson contends that the deletion of the phrase is apparently not 
accidental since it accurately reflects the fact that the new filing 
will not enable shippers or any other member of the public to (1) learn 
how a given pipeline defines ``operating employee'' or how it 
interprets the phrase ``practicable,'' (2) receive notice of any such 
filing, (3) have an opportunity to comment thereon, or (4) obtain a 
decision based upon public evidence compiled in a public record in 
accordance with applicable law.
    Hadson states that faced with the Commission's determination to 
leave the definitional difficulties to be resolved in the individual 
restructuring dockets, it did not seek judicial review of Order No. 636 
on these issues and has diligently raised these points in its comments 
on various pipelines' proposed Order No. 636 compliance plans.
    Hadson asserts that the issue here is whether the Commission may 
rely upon what Hadson calls the stealth procedures of section 161.3(j) 
for purposes of making its decision in this docket to eliminate the 
publicly available monitoring requirement. For the reason set forth 
above, Hadson submits that the Commission cannot do so.
2. Commission Ruling
    The Commission rejects Hadson's argument that its procedures for 
acting on Sec. 161.3(j) and Sec. 284.286(e) filings prohibit public 
participation. Hadson misinterprets Sec. 284.286(e). It requires 
pipelines to file procedures for complying with standards of conduct as 
part of their publicly noticed compliance filings.34 Any 
interested person can participate in those proceedings and protest 
pipelines' proposals for complying with the standards. All the 
pipelines' compliance filings have been publicly available and Hadson, 
as well as other interested persons, have had ample opportunity to 
comment on those procedures. In fact, Hadson intervened in 91 
restructuring proceedings and filed comments with respect to several 
pipelines' standards of conduct.35 Contrary to Hadson's claims of 
``stealth,'' the Commission's decisions with respect to the standards 
of conduct will be reviewed in the context of the restructuring 
proceedings.
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    \3\4Order No. 636-A, III FERC Stats. & Regs. Preambles, 30,950 
at 30,623-4 (1992).
    \3\5See Hadson's comments in Florida Gas Transmission Company in 
Docket No. RS92-16-000, et al., Texas Gas Transmission Corp. in 
Docket No. RS92-24-000, Natural Gas Pipeline Company of America in 
Docket No. RS92-45-000.
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    The public also participated in the proceedings in which the 
Commission reviewed the standards of conduct pipelines had filed before 
Order No. 636 required restructuring. Although the Commission labeled 
these proceedings as ``non-adversarial,''36 and invited the public 
to file complaints,37 it also addressed all requests for rehearing 
of the May 1991 standards of conduct decisions (these dockets have the 
prefix MG).38 Eight parties sought rehearing of the May 1991 MG 
orders.39 Of those, IGM asked the Commission to address its 
previous protests.40 In the Order on Rehearing, the Commission 
individually addressed each of IGM's previous allegations concerning 
pipelines' implementation of the standards.41 Hadson had the same 
opportunity to file comments and protests in the pipelines' pre-Order 
No. 636 standards of conduct (MG) proceedings and did not.
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    \3\6Algonquin Gas Transmission Co., et al., 55 FERC  61,260 at 
61,833, n. 6 (1991).
    \3\7Algonquin Gas Transmission Co., et al., 55 FERC  61,261 at 
61,836 (1991).
    \3\8Section 385.713 of the Commission's regulations gives 
parties 30 days to request rehearing after the Commission issues a 
final order. 18 CFR 385.713 (1993).
    \3\9Algonquin Gas Transmission Company, Carnegie Natural Gas 
Company, Independent Gas Marketers (IGM), Panhandle Eastern Pipeline 
Company, Southwest Gas Storage Company, Trunkline Gas Company, Texas 
Eastern Transmission Corporation, and Vesta Energy Company.
    \4\058 FERC  61,143 at 61,455 (1992).
    \4\1Id., at 61,455-60.
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    Finally, Hadson incorrectly states that the Commission treated the 
MG filings as non-public. These filings are public and are available 
through the Commission's Records Information and Management System. In 
addition, all conversations that occurred between the Commission staff 
and pipelines were memorialized in memoranda that were placed in the 
Commission's public files.42 The public had an opportunity to 
raise issues concerning those conversations during rehearing of the May 
1991 orders.
---------------------------------------------------------------------------

    \4\2ANR Pipeline Co. et. al., 55 FERC  61,260 at 61,833, n. 6.
---------------------------------------------------------------------------

    Therefore, not only are the MG filings public, but contrary to 
Hadson's assertions, they have no real relation to our decision to 
eliminate the requirement to file Form 592s. The MG dockets concern the 
pipelines' general implementation of the standards of conduct. In 
contrast, Form 592 is a log of specific transportation transactions. As 
stated, we are eliminating the requirements to file Form 592s because 
the information contained in them will be available on pipelines' 
EBBs.43
---------------------------------------------------------------------------

    \4\3See discussion at Section IV.B.
---------------------------------------------------------------------------

    However, the Commission does agree that, prospectively, it can 
facilitate access to pipelines' standards of conduct filings by 
publicly noticing them. As a result, the Commission will require all 
future standards of conduct filings made under Sec. 161.3(j) and all 
requests for waiver of the standards to include form notices suitable 
for publishing in the Federal Register.

E. Interpretation of ``Operating Employee''

    In response to questions raised by Hadson and other companies and 
in order to assist pipelines in their compliance with the separation of 
operating personnel as required by Standard G and the reporting 
requirements of Sec. 250.16(b), the Commission will clarify what type 
of employee it considers an ``operating employee.''
    Standard G, 18 CFR 161.3(g), states that ``[t]o the maximum extent 
practicable a [pipeline's] operating employees and the operating 
employees of its marketing affiliate must function independently of 
each other.'' In addition, under the reporting requirements of 
Sec. 250.16(b), ``[a]n interstate pipeline must file * * * (1)[n]ew and 
existing tariff provisions containing * * * (i) [a] complete list of 
operating personnel and facilities shared by the interstate natural gas 
pipeline and the affiliated marketing or brokering company.''
    While not mandating organizational separation, Standard G ensures 
against affiliate preference and the discriminatory dissemination of 
information by requiring a pipeline to provide, to the maximum extent 
practicable, for the independent functioning of ``operating personnel'' 
of the pipeline and its marketing affiliate. The contemporaneous 
disclosure mandate of Standard F requires that to the extent a pipeline 
provides to a marketing affiliate any information related to 
transportation of natural gas, it must provide that information 
contemporaneously to all potential shippers, affiliated and 
nonaffiliated, on its system. Standard G's requirement that operating 
employees are to function independently to the maximum extent 
practicable will help ensure that the opportunity to share such 
information is minimized. If, for example, a pipeline and its marketing 
affiliate could evade the contemporaneous disclosure requirement simply 
by using the same person to arrange transportation on the pipeline and 
market gas for the affiliate, the rule would be substantially 
undermined.
    Throughout the rulemaking proceeding, however, the Commission has 
held that complete divestment, divorcement, or organizational 
separation of pipelines and their marketing affiliates is not necessary 
to prevent the abuses at which the marketing affiliates rule is aimed. 
The independent functioning requirement does not require a pipeline to 
separate all of its employees from those of a marketing affiliate, but 
rather only operating employees. This determination is consistent with 
the Commission's finding that complete organizational separation is 
unnecessary and may even be harmful where divestment chills essential 
day-to-day communications between the pipeline and its affiliate.
    The Commission stated in Order No. 497-A that the phrase 
```operating employees' can include officers, directors and managers as 
well as non-management employees.''44 However, without further 
clarification of that phrase, pipelines may not be able to identify 
properly every ``operating employee,'' especially those shared with 
their affiliate. Since different pipelines are faced with different 
practical circumstances, a person's status as an ``operating employee'' 
will, in many situations, depend not on his or her occupation or title, 
but on his or her actual function within the company.
---------------------------------------------------------------------------

    \4\4Order No. 497-A at 31,598.
---------------------------------------------------------------------------

    To provide further guidance, the Commission interprets ``operating 
employee'' to mean an individual who has day-to-day duties and 
responsibilities for planning, directing, organizing, or carrying out 
gas-related operations, including gas transportation, gas sales or gas 
marketing activities. Examples of operating employees include any 
member of the board of directors, officers, managers, supervisors, 
regulatory and technical personnel with duties involving day-to-day gas 
purchasing, marketing, sales, transportation, operations, dispatching, 
storage, or related activities. Such operating employees may be 
expected to receive and use information concerning such functions for 
the benefit of the specific entity for which they work directly. Under 
normal circumstances, employees, including highly-placed operatives 
such as members of the board of directors or officers of the 
corporations, who do not have such duties would not be likely to 
receive or use transportation-related information subject to Standard 
F. To the extent a non-operating person obtains such information and 
provides it to the marketing affiliate, the pipeline would be required 
to disclose the information contemporaneously pursuant to Standard F.
    Employees with no direct operational responsibilities and whose 
duties are only supportive in nature need not be considered operating 
employees. Examples of non-operating employees include support 
personnel not engaged in the day-to-day marketing, sales, 
transportation or other gas-related operations of the affiliated 
companies, clerical and secretarial staff, general office building 
maintenance personnel, and payroll and general accounting staff.

F. Extension of Reporting Requirements

    Finally, the Commission will only extend the sunset date of Order 
No. 497's reporting requirements from December 31, 1993, until June 30, 
1994, because contemporaneously with this order the Commission is 
issuing a NOPR in Docket No. RM94-6-000 which, among other things, 
substantially revises Order No. 497's reporting requirements. The 
Commission believes that extending the sunset provision to June 30, 
1994, will allow the Commission enough time to issue a final rule 
setting forth the new reporting requirements and will also prevent any 
gaps in the reporting requirements which would occur if the Commission 
simply let the sunset provision lapse.

V. Information Collection Statement

    Office of Management and Budget (OMB) regulations require approval 
of certain information collection requirements imposed by agency 
rules.45 The subject order does not establish any new information 
collection requirements and does not reduce the reporting requirements 
under FERC-592, Marketing Affiliates of Interstate Pipelines, as 
revised by Commission Order Nos. 497-D and 636 (OMB Control No. 1902-
0157).
---------------------------------------------------------------------------

    \4\55 CFR 1320.14.
---------------------------------------------------------------------------

    The information required under FERC-592 enables the Commission to 
carry out its legislative mandate under the NGA and NGPA and will help 
ensure a viable capacity release market under the Commission's Order 
No. 636. Specifically, the required information allows the Commission 
to review/monitor pipeline transportation, sales, and storage 
transactions with its marketing affiliates to deter undue 
discrimination and to take appropriate action, where and when 
necessary. The information is also used by others to indicate whether 
or not there has been discrimination in pipeline/affiliate/nonaffiliate 
transactions.
    The Commission is notifying OMB that there is no change in the 
FERC-592 reporting requirements as a result of the subject order and 
requesting that OMB extend its approval of FERC-592 through June 30, 
1994. The 180-day extension of FERC-592 is necessary to allow the 
Commission adequate time to prepare a final rule based on the related 
NOPR, issued concurrently with this order, in Docket No. RM94-6-000 
(Standards of Conduct and Reporting Requirements for Transportation and 
Affiliate Transactions).
    Interested persons may obtain further information by contacting the 
Federal Energy Regulatory Commission, 941 North Capitol Street, NE., 
Washington, DC 20426 [Attention: Michael Miller, Information Services 
Division, (202) 208-1415]. Comments on the FERC-592 reporting 
requirements may also be sent to the Office of Information and 
Regulatory Affairs, Office of Management and Budget, Washington, DC 
20503 [Attention: Desk Officer for Federal Energy Regulatory 
Commission].

VI. Effective Date

    Section 553(d) of the Administrative Procedure Act (APA)46 
generally requires a rule to be effective not less than 30 days after 
publication in the Federal Register unless good cause is found to 
shorten the time period. The sunset date for the reporting requirements 
will expire before the APA's 30 day publication requirement has been 
fulfilled thus causing a gap in the reporting requirements. Therefore, 
in order to prevent a gap in the rule's reporting requirements, this 
final rule is effective January 1, 1994.
---------------------------------------------------------------------------

    \4\65 U.S.C. 553(d).
---------------------------------------------------------------------------

List of Subjects

18 CFR Part 161

    Natural gas, Reporting and recordkeeping requirements.

18 CFR Part 250

    Natural gas, Reporting and recordkeeping requirements.

    By the Commission.
Lois D. Cashell,
Secretary.
    In consideration of the foregoing, the Commission amends parts 161 
and 250, chapter I, title 18 Code of Federal Regulations as set forth 
below.

PART 161--STANDARDS OF CONDUCT FOR INTERSTATE PIPELINES WITH 
MARKETING AFFILIATES

    1. The authority citation for part 161 continues to read as 
follows:

    Authority: 15 U.S.C. 717-717w, 3301-3432; 42 U.S.C. 7101-7352.

    2. In Sec. 161.3, paragraph (f) is revised to read as follows:


Sec. 161.3  Standards of conduct.

* * * * *
    (f) To the extent it provides to a marketing affiliate information 
related to transportation of natural gas, it must provide that 
information contemporaneously to all potential shippers, affiliated and 
nonaffiliated, on its system.
* * * * *

PART 250--FORMS

    1. The authority citation for part 250 continues to read as 
follows:

    Authority: 15 U.S.C. 717-717w, 3301-3432; 42 U.S.C. 7101-7352.

    2. In Sec. 250.16, paragraphs (a)(3), (c)(1), (c)(2) and (d)(1) are 
revised to read as follows:


Sec. 250.16  Format of compliance plan for transportation services and 
affiliate transactions.

    (a) Who must comply. * * *
    (3) Maintain all information required under this section from the 
time the information is received until June 30, 1994.
* * * * *
    (c) What to maintain. (1) An interstate pipeline must maintain the 
information in paragraph (b)(2) of this section for all requests for 
transportation services made by nonaffiliated shippers or in which a 
nonaffiliated shipper is involved from the time the information is 
received until June 30, 1994.
    (2) The information required to be maintained by this section will 
be available from September 12, 1988, and should be maintained 
consistent with the requirements of Sec. 284.8(b)(4)(ii) of the 
Commission's regulations.
* * * * *
    (d) When to file. (1) The information in paragraph (b)(1) of this 
section and entries in the log specified in paragraph (b)(2) of this 
section relating to transportation requests for which transportation 
has commenced 30 days or more previously, which have been denied, or 
which have been pending for more than six months, must be filed 
initially with the Commission by September 19, 1988, and thereafter as 
required by paragraphs (d)(2) and (d)(4) until the earlier of: 90 days 
after the Commission has determined that the pipeline is in full 
compliance with the requirements of Order No. 636; or June 30, 1994. 
This requirement applies to transportation service that commenced or 
transportation requests that were denied after July 14, 1988, or that 
were pending for six months or more on July 14, 1988.
* * * * *
[FR Doc. 94-32 Filed 1-3-94; 8:45 a.m.]
BILLING CODE 6717-01-P